As long as your loan is in good standing, lenders must typically accept the payments you make toward your loan. However, the law doesn't require lenders to accept partial payments from debtors in default. If your loan is delinquent and the loan department refuses your offer of partial payment, you remain liable for the full amount of the debt.
Payment Refusals in Good Standing
As long as you are making the payments in accordance with your contract, loan departments typically can't refuse your payment. A lender also must accept your payment if you had defaulted in the past but negotiated a new contract and are meeting its terms. If a loan department refuses to accept your payment in either of these situations, it can't typically hold you responsible for any late fees, nor can it declare your account delinquent.
Payment Refusals After Reaffirmation
After bankruptcy, you may have the option to reaffirm secured debts that were discharged during the case. Bankruptcy laws prohibit creditors from foreclosing on your collateral after bankruptcy as long as your payments are current, regardless of whether or not you reaffirmed the debt. Some creditors may attempt to refuse your payments in order to foreclose on your collateral, but they can't usually do this unless you are already in default.
Payment Refusals in Default
If you are in default, loan departments can refuse to accept your payments for various reasons. If the lender considers the payment too small, he may refuse to accept it. He may also refuse the payment if he has already begun a lawsuit against you, or if you made the payment using an unreliable method, such as a personal check. Though lenders may accept personal checks when your loan is in good standing, some lenders won't accept payments on delinquent accounts unless you make them using either a money order or a cashier's check.
After a Payment Refusal
A loan department's refusal to accept your payment doesn't discharge your obligation to repay the debt. If the lender refused a partial payment on a delinquent balance because he considered the payment too small, you can place the money in a savings account and add to it until you have enough funds to make a larger payment. You can also keep records of your payment attempts to show to the court if the lender sues you.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.